Correlation Between Bank Central and Bakrieland Development
Can any of the company-specific risk be diversified away by investing in both Bank Central and Bakrieland Development at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Bank Central and Bakrieland Development into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank Central Asia and Bakrieland Development Tbk, you can compare the effects of market volatilities on Bank Central and Bakrieland Development and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Bank Central with a short position of Bakrieland Development. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Central and Bakrieland Development.
Diversification Opportunities for Bank Central and Bakrieland Development
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Bank and Bakrieland is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Bank Central Asia and Bakrieland Development Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bakrieland Development and Bank Central is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Bank Central Asia are associated (or correlated) with Bakrieland Development. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bakrieland Development has no effect on the direction of Bank Central i.e., Bank Central and Bakrieland Development go up and down completely randomly.
Pair Corralation between Bank Central and Bakrieland Development
Assuming the 90 days trading horizon Bank Central Asia is expected to under-perform the Bakrieland Development. But the stock apears to be less risky and, when comparing its historical volatility, Bank Central Asia is 2.15 times less risky than Bakrieland Development. The stock trades about -0.13 of its potential returns per unit of risk. The Bakrieland Development Tbk is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 1,100 in Bakrieland Development Tbk on November 3, 2024 and sell it today you would earn a total of 200.00 from holding Bakrieland Development Tbk or generate 18.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.0% |
| Values | Daily Returns |
Bank Central Asia vs. Bakrieland Development Tbk
Performance |
| Timeline |
| Bank Central Asia |
| Bakrieland Development |
Bank Central and Bakrieland Development Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Central and Bakrieland Development
The main advantage of trading using opposite Bank Central and Bakrieland Development positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Central position performs unexpectedly, Bakrieland Development can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Bakrieland Development will offset losses from the drop in Bakrieland Development's long position.| Bank Central vs. Bank Rakyat Indonesia | Bank Central vs. Bank Mandiri Persero | Bank Central vs. Bank Negara Indonesia | Bank Central vs. Astra International Tbk |
| Bakrieland Development vs. Bakrie Brothers Tbk | Bakrieland Development vs. Bakrie Sumatera Plantations | Bakrieland Development vs. Energi Mega Persada | Bakrieland Development vs. Darma Henwa Tbk |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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